S&W Share Price Jumps 18%, WSJ Blames ‘Paranoia’

Smith & Wesson Model 60 (courtesy The Truth About Guns)

Everybody needs money,” Danny DeVito sneers at Gene Hackman in David Mamet’s classic movie Heist, “That’s why they call it ‘money.'” If Smith & Wesson is making ‘money’ hand over fist these days, why won’t the Wall Street Journal’s Marketwatch blog show them some love? Their headline? “Smith & Wesson’s Future Depends On Continued Paranoia.” This puzzles me, because last I checked the WSJ hadn’t waded into the blue state/red state debate. As capitalists, the only color they’re supposed to care about is green . . .

The header gives you the numbers. S&W had a banner 2013. Despite declines in government and rifle sales, their profits jumped by 42% in the third quarter of 2013 and their stock price got a nice 18% bounce this week. Those are astronomical numbers for a ‘legacy’ U.S.-based industrial manufacturing company.

Even gunnies acknowledge that numbers this good are too good to last. Level-headed analysts like Wedbush and Northland Capital have urged investors to be cautious before jumping on the S&W bandwagon, noting that 30% year-on-year increases in handgun sales simply can’t be sustained forever.

These analysts understand growth like this can only be sustained in the short term, that it’s almost always driven by external forces that disrupt the ordinary curves of supply and demand. In the case of firearms, those external forces are named Obama and Bloomberg.

WSJ blog’s headline doesn’t say that, though. It implies that S&W’s sales surge was driven by paranoid ‘Murricans buying (literally) insane quantities of handguns, because of fear and distrust of their gum’mint. If this were an oil bubble or a real estate bubble, the WSJ blog would call it just that: a bubble. But when it’s guns, it becomes ‘paranoia.’ Media bias much?

comments

  1. avatar dwb says:

    “Smith & Wesson’s Future Depends On Continued Paranoia.Obama”

    1. avatar Nine says:

      “Smith & Wesson’s Future Depends on Obama’s Continued Paranoia”

      1. avatar dwb says:

        yeah, we could go back and forth. One of my favorite comments from the Marketwatch article is:

        After 22 years in the military and 15 years in law enforcement, I never felt the need to keep a gun at home until Obama. Why:

        The beauty of the Second Amendment is that it will not be needed until they try to take it. (Thomas Jefferson)

        Obama: still the greatest gun salesman on Earth

  2. avatar RockOnHellChild says:

    We’re buying large quantities of handguns because of distrusting the gummint?

    Don’t be silly…

    We’re buying large quantities of rifles because of distrusting the gummint.

    1. avatar Ralph says:

      I trust my gummint to do every bad, unconstitutional and destructive thing that can be conceived of by the lowlives that run it. And that, my friend, is trust in its purest form.

      1. avatar peirsonb says:

        See, that’s the thing about dishonest people. You can always trust them to be dishonest.

        1. avatar Charles5 says:

          Honestly, its the honest ones that you want to watch out for, because you can never predict when they are going to do something incredible stupid.

        2. avatar RockOnHellChild says:

          This sounds somewhat like an issue Mr Carlin addressed…

          http://m.youtube.com/watch?v=xeo_Ypmba70

    2. avatar Samuel Leoon Suggs says:

      S&W makes rifles

      1. avatar RockOnHellChild says:

        I love lamp…

        1. avatar Anon in CT says:

          I killed a man with a Trident.

        2. avatar Accur81 says:

          I’ve been thinking about that. You should probably lay low for a little while because you might be wanted for murder.

    3. avatar Vhyrus says:

      I buy handguns because theyre cheap, easily moved, and retain value. I only need 1 rifle.

  3. avatar Ralph says:

    Before calling it “paranoia,” maybe the schmuck at the WSJ should have spoken to the people of Connecticut.

    1. avatar bontai Joe says:

      …. and Maryland and California.

  4. avatar Samuel Leoon Suggs says:

    How is it paranoia if the product your buying has been banned previously?

    1. avatar Samuel Leoon Suggs says:

      By the same government that’s trying to ban it again.

  5. avatar Ken says:

    Heist reference for the win. love it.

  6. avatar John L. says:

    And of course guns are durable goods; given a modicum of care they can last a long time. So the sales bubble is likely to depress future sales even more than you might think at first; if and when the furor dies down many almost unused pistols and MSRs could appear on the secondary market.

  7. avatar Randy Drescher says:

    So the gubmint isn’t comming for guns wall st urinal? Well, thats good enough for me.

  8. avatar Arsh says:

    The idea that there will be much of a weapons bubble is well not fully true. People are gearing up because the storm is coming. If Obama doesn’t start it Hitlery will.

  9. avatar James says:

    Remember, the paper is based in NYC, the utopia infused with a thought-dampening energy field that turns normal men into mincing metrosexuals who are almost as afraid of guns as they are of not getting a window table at 21.

  10. avatar Dyspeptic Gunsmith says:

    The common misperception is that the WSJ is a “conservative” newspaper.

    Only their op-ed page can be remotely considered “conservative,” and then only on certain issues. For the rest of their paper, they reflect their NYC urban sophisticate bias: Guns are icky, and gun owners are backwards, stump-jumping rednecks.

    1. avatar neiowa says:

      Former subscriber. Even did a change of address and had it delivered to the field when I was on active duty in the 80s (a bit outside of the box).

      The WSJ has not been a journal of commerce and business for many years. They were on the right track to defeat the internet/online “news” and to survive the death of the newspaper business until the internet arrived. Then they decided to become another “me too” “centrist (left of center) “journalism” employment center. As waste of a once great institution.

    2. avatar bontai Joe says:

      Hmmmm, I’ve racked my brain thru all my life experiences and I don’t recall ever jumping a stump. I’ve sat on plenty of ’em and walked around just as many, but nope, I never jumped one (LOL)

  11. avatar BDub says:

    What hypocrisy – paranoia, to a lesser or greater degree, is what causes money in the markets to move in general, regardless of the products or services being traded. If everyone was 100% confident in their investments, or lack of, the market would instantly stagnate!

  12. avatar OODAloop says:

    That’s like saying that vehicle sales rise due to continued flight from blighted urban communities. While it might be a small facet of sales, cherry-picking only the bits you like are very disingenuous.

    BTW, with it’s new microstamping requirements, California just became the largest revolver market on the planet. Smith & Wesson makes revolvers. I don’t believe investing some money into their stock right now would be a poor investment.

    1. avatar John L. says:

      Perhaps not a bad investment; however, I’d consider companies that make ammo also.

  13. avatar Curtis in IL says:

    “Paranoia” is a psychiatric condition. Psychiatrists make diagnoses by examining patients, not by analyzing sales trends. The use of the word by WSJ in this context is simply irresponsible.

  14. avatar Jonathan - Houston says:

    You may be reading too much into it. The WSJ, and really just about all financial market publications, pretty regularly acknowledge that emotions drive much of the market’s fluctuations and contribute mightily to their long term trends. The two primary emotions being fear and greed.

    True, normally this is in reference to people trading the shares of stock themselves, as opposed to people buying the underlying companies’ products, but that’s not too much of a stretch. I think I remember them claiming Amazon’s entire business model was based on paranoia, their own, to remain relevant and entrenched, but still it’s the “P” word.

    It’s a trite word and misapplied, anyway, considering the government actually is trying to snatch away the guns. It’s probably more a matter of sloppy journalism than bias.

    1. avatar scoolbubba says:

      Agreed. Of all the major dead tree rags, the WSJ is by far the most level headed and least biased. They generally ‘get it’ when it comes to what’s driving market forces; I’d chalk this one up to a boneheaded choice in phrasing vice someone with an axe to grind.

  15. avatar Jim Barrett says:

    If you do the research and/or read it long enough, you realize that while the editorial page is conservative, the rest of the paper is very liberal. So, no surprises with his article.

  16. avatar Anmut says:

    As a subscriber to the paper version, which I read everyday, of the WSJ, I can tell you they are very liberal. They just mask it with a “Capitalism Comes First” attitude. I’ve had it for almost a year and the only thing I can bear reading anymore is the opinion pieces and Market section. The actual reporting is trash.

  17. avatar Col. Angus says:

    Many of Market Watch’s columnists are idiots. I never read it anymore.

  18. avatar JasonM says:

    The WSJ is not a capitalist newspaper. They subscribe to a mercantilist philosophy that Hamilton and Clay referred to as the American system (even though it’s entirely anti-American), and that Mussolini later rebranded as Fascism. The Journal believes in a strong central government that works with politically connected businesses, and a central banking cartel to maintain the position of the ruling elite. It’s a whole lot easier for the elite to remain elite, if they (or rather their enforcer class) are the only ones with guns.

  19. avatar MrVigs says:

    I would buy some of their stock if I wasn’t so broke from buying so many fucking guns

    1. avatar Anmut says:

      HAHA. F*cking Win Of The Day!

  20. avatar Gov. William J. Le Petomane says:

    The economic term is ‘regime uncertainty’. There are economists who actually believe such a thing doesn’t exist, but without it how do you explain the record growth in firearm sales?

    In 1987 when the stock market took it’s biggest crash since 1929 the economy zipped along with barely a hiccup because people, and in particular business people had confidence in our leadership at the time. Contrast that with 2008 when it started becoming apparent that O’Bama would win the election the already recessing economy took a nose dive. The ‘low information voters’ as El Rushbo calls them never noticed, but the business community was all abuzz about O’Bama’s promises to ‘bankrupt the coal industry’ and make ‘the price of electricity skyrocket’, take over the nations health care system, raise taxes on businesses, and ‘fundamentally change’ the whole damn country. In short, in October of 2008 they were shitting their pants.

    Likewise in 1929, the worst thing Hoover did was not the Smoot-Hawley Tariff Act, or any legislation he signed. The worst thing he did was go out on the stump and threaten that if business started cutting wages the government was going to step in and do something about it. When the economy goes into depression people lose their jobs and they can’t buy goods and services. When sales decline businesses are forced to lower prices, increasing demand and acting as a natural buffer. But businesses can only reduce cost if it lowers the cost of production. Meanwhile their workers are finding their money worth more and more because of deflation. Lowering wages makes perfect sense, but instead prices and wages held and sales continued to plummet. Business handled the decreasing demand by laying off more and more workers initiating an endless cycle we now call ‘The Great Depression’. And don’t even get me started about FDR.

    So yes, when people fear what the government is about to do to them you’ll have this sort of thing (record gun sales). I do think that sales are unlikely to return to pre-O’Bama levels though, because I think the percentage of firearm owners has gone up and that is likely a long term trend. Thanks to the worst president of my lifetime.

  21. avatar CA_Chris says:

    SWHC is worth more a bit more than its current price, in my opinion. This jump is simply the price returning to where it was 2 months ago. Stock markets overall slid over the last two months, and prices are now correcting. As a brand, SWHC has a great name with great products, including what may be one of the very few CC weapons on-roster in CA as Peruta goes into effect: the Shield (one of the few exceptions to SW’s withdrawal from the CA handgun market).

  22. avatar Southern Cross says:

    And California will be a growth market for revolvers.

  23. avatar Soccerchainsaw says:

    It’s hard to imagine that the demand that may have started from fear/paranoia that O was coming for your guns could have continued for such a long time. I think a different dynamic is going on now and it’s more related to a better knowledge base about guns and their place in society.

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